Establishing a business presence in Australia opens the door to one of the world’s most stable and business-friendly markets. A foreign company that decides to establish a business presence in Australia can do so in several ways. The three most common options are proprietary company, registered foreign company and representative office.
Foreign companies should consider each option’s advantages, legal and regulatory requirements, and taxation implications. This guide explores these three approaches, highlighting how each caters to distinct business needs and operational goals.
- Foreign entities can choose from three main options to establish a presence in Australia.
- Foreign companies need to understand each option’s legal, regulatory, and tax-related aspects before deciding.
- Setting up each entity type involves specific steps, such as name reservation, determining governance structure, appointing officeholders, and registering with relevant authorities.
Option 1: Proprietary company
To explore this option, refer to our guide on setting up a proprietary company in Australia.
Many companies choose to establish a separate Australian entity to manage their Australian operations. This is known as a proprietary limited (Pty Ltd) company.
This type of company is treated in the same manner as any other Australian Pty Ltd. It may provide more credibility when interacting with Australian businesses and government entities compared to a registered foreign company.
A Pty Ltd in Australia must meet various requirements:
- Have at least one shareholder, but no more than 50 non-employee shareholders.
- Appoint at least one director who is an Australian resident
- If a secretary is appointed, they must be an Australian resident
- Have a registered office located in Australia
The Pty Ltd provides limited liability to shareholders, meaning they are liable for any unpaid amount on their shares in the event of a wind-up. Companies cannot engage in fundraising activities that would require the lodgement of a prospectus (i.e., seeking to raise funds from the public). They can, however, raise money through private sales of equity.
Establishing and incorporating a Pty Ltd company is fast, straightforward, and cost-effective.
Steps to incorporate a proprietary company
Incorporating a Pty Ltd involves four primary steps:
- Choose and reserve a company name.
Submit Form 410 – Application for Reservation of a Name to the Australian Securities and Investment Commission (ASIC). - Decide on governance.
Decide whether a company will operate under a:- company constitution,
- replaceable rules, or
- a combination of both.
- Appoint a director and secretary.
The company must have a resident director and, if applicable, a secretary, both of whom must be Australian residents. - Register the company.
Complete registration through the Business Registration Service.
Option 2: Registered foreign company
To explore this option, refer to our guide on setting up a registered foreign company in Australia.
Foreign companies wishing to conduct business in Australia without creating a separate Australian entity may register directly with the ASIC. A registered foreign company operates as an extension of the parent company rather than a separate legal entity. This is similar to establishing a representative office or branch of a foreign company abroad.
Steps to incorporate a registered foreign company
There are three key steps to setting up a registered foreign company in Australia.
- Confirm the company name.
Verify the availability of the intended name and reserve it for use in Australia. - Prepare supporting documents.
Gather and submit the following documents:- Form 402 – Application for Registration as a Foreign Company
- A certificate from the company’s home jurisdiction confirming its registration
- A certified copy of the company’s constitution
- Form 418 – Memorandum of Appointment of Local Agent
- A memorandum outlining the powers of specific directors
- Submit the form and supporting documents to the ASIC.
Submit the completed form and supporting documents for review and approval.
Option 3: Representative office
Foreign companies seeking a presence in Australia but want to avoid conducting business activities may consider establishing a representative office. This format allows companies to explore the Australian market, identify potential customers, and promote products; however, they cannot engage in activities that generate income.
If the representative office signs contracts or engages in sales, it would then be considered a business operation, qualifying as a permanent establishment in Australia. While ASIC registration is not required, the office must register with the Australian Taxation Office (ATO) if it plans to employ.
Steps to incorporate a representative office
Setting up a representative office in Australia involves two steps:
- Set up a physical office.
Secure a physical space to serve as the representative office in Australia. - If employing staff, register with the ATO.
Register the office if any employees will work from the Australian location.
Comparison of foreign company registration options in Australia
| Type | Pty Ltd | Registered foreign company | Representative office |
|---|---|---|---|
| Set up time | One month | Up to three months | One month |
| Income tax liability/tax losses | Yes/quarantined | Yes/quarantined | No/back to parent |
| Annual corporate income tax return (full filing) required? | Yes | Yes | No |
| Goods & Service Tax (GST) | Yes | Yes | Yes |
| Transfer pricing arrangements required? | Yes | Yes | No |
| Repatriation of profits | Dividend and interest | Direct – after tax profits (to parent) | Direct (with no tax) |
| ASIC (Australian Corporate Regulator) – register required? | Yes | Yes | No |
| Annual financial statements required to be submitted to ASIC? | No (subject to exemption if foreign-controlled) | Yes | N/A |
| Audit required? | No (subject to exemption if foreign-controlled) | Depends on the home country’s reporting requirements | N/A |
| Commercial/business risk | Quarantined in Pty Ltd | Held by parent | Held by parent |
| Dealing with suppliers | Minimal | Somewhat difficult | Difficult |
| Expect long term commitment | Best | Worst | Worst |
| Closure | More challenging | Easy | Easier |
| Officeholders required | Resident director & resident public officer | Local agent & resident public officer | N/A |
| Can open a local bank account? | Yes | Yes | No |
| Ability to employ | Easy | Easy | Difficult |
Conclusion
Foreign companies can choose the most suitable structure to effectively establish a presence in the Australian market by carefully evaluating these options. Whether establishing a fully operational base or exploring potential opportunities, Australia provides a welcoming environment for international ventures. To assist you in making informed decisions and avoid potential regulatory challenges, consulting with experts can offer practical solutions to setting up a foreign company.
How Acclime can help with foreign company registration in Australia
Acclime Australia offers complete support related to foreign company registration and compliance for businesses entering the Australian market. From entity selection to regulatory approvals, our team of experts can assist with everything from assessing the most suitable registration options to preparing and lodging registration documents and managing ongoing compliance requirements.
By partnering with us, international businesses can confidently establish their presence in Australia and maintain compliance with local laws. Contact us to learn more about how we can support your specific needs for foreign company setup and regulatory compliance.
Disclaimer
This information is of a general nature and is not intended to address the circumstances of any particular individual or entity. We would recommend addressing your specific circumstances as relates to these items with a suitable qualified expert.
